[drbeast]

When everyone is expecting a recession, one does not come.

Expecting higher inflation and flat to slightly reduced growth (aka stagflation). Find dividend paying stocks that actually keep up with inflation (10-20%). They exist and have track records of maintaining this pay out, you just need to find them.

[zeusk]

I'm sorry but can you list a single stock with 15% dividend with track record for paying that out consistently?

15%+ growth (considering they pay taxes and have expenses other than dividend) consistently will reach astronomical numbers pretty quick.

[adam_arthur]

There are plenty of high yield investments that pay 10%+ right now.

PDO paid out ~20% last year, including special dividends. And likely will perform similarly this year, though somewhat lower due to cost of leverage increasing.

AFCG has senior, real estate secured loans and pays 14.5% with no debt (though recently opened a line of credit). Even in event of default, they get to assume ownership of valuable properties.

PBR yields 50%+ on TTM basis. Though will be lower going forward and has a fair amount of political risk

High yielding stocks tend to be lenders, and the risk profile of the loans is up to you to assess. But you can find many apparent great deals right now, assuming we don't enter a new depression with mass defaults.

Even in the GFC, high yield debt only reached a 15% default rate. Which still leaves you sitting pretty with a lot of these lenders, after factoring in yields and discounts to NAV. You can expect price to become depressed for a period of time in an event like this, though. e.g. See ARCC performance during 2008

[zeusk]

I'm sorry, none of them have a track record of paying 15%+ yield. The yield looks high right now because they're in distress and the asset prices have gone down, with earnings heading lower and higher borrow cost I doubt those yields will even make a dent to capital losses in owning those assets.

PDO and AFCG were not even listed 5 years ago. PBR is very much a distressed asset in a state pursuing nationalization of oil profits.

[adam_arthur]

You’re simply wrong, these positions are not distressed.

PDO is a bond fund, not a company. They earn interest on bonds they hold. All bonds have lost value as risk free rate has risen. The interest payments on those bonds has remained the same, and they don’t hold non-performing loans. There is no distress in the portfolio.

If rates drop again in the future, the capital losses revert back to capital gains. If you think the Fed will hike substantially more from here, then these arent the place to be. I for one think they dont have much further to go

These are managed by PIMCO which is a famous fixed income firm, not some nobody. You can look at PTY for a longer track record public fund. Which performed very well through the GFC by the way

AFCG has 0 debt and real estate secured loans. Not distressed, even if they experience defaults in a severe recession. Lenders go bust when they are overindebted and cant service debt due to defaults. Lenders without debt don’t

PBR has a PE of less than 2 and is not distressed at all. Its price is down due to political fears that the new government will mismanage the company. Fears which are likely to be overblown.

ARCC and CSWC are two other high yield lenders that are doing better than ever. CSWC sports close to a 15% yield including specials, and they’ve raised the dividend consistently every year.

ABR pays 13% and raises the dividend double digits every year. Multifamily secured loans. Has performed better than most hype growth tech stocks while paying double digits

There are plenty of deep value and high yield plays out there. Too bad that most don’t care to look for them

[zeusk]

> PBR has a PE of less than 2 and is not distressed at all. Its price is down due to political fears that the new government will mismanage the company. Fears which are likely to be overblown.

You really don’t know what you’re talking about and are underplaying material risks like the govt. withholding most or all profits of the nationalized oil firm.

And like I said, the other stocks you had mentioned didn’t exist 3 years ago - that’s not a track record to judge by - issuing leveraged loans in free money environment which is no more.

[roflyear]

Are you taking into account stock price, as well?

For example, if you buy a stock at $5, and it pays out $3 of dividends, ok that may be great, but if the value of the stock is now $2...

[drbeast]

Yes OXSQ is a BDR firm I like. IEP is Carl Icahn's conglomerate that yields 15%.

https://www.marketbeat.com/dividends/high-yield/

Anything less than 20% is what you're looking for. If you expand to foreign markets like the UK, they're entire stock market is set up to prefer dividend payments over share price.

I avoid miners and commodity stocks like rio tinto though I did time the commodity boom correctly to get their fat dividend they had not that long ago.

[roflyear]

They do not exist, absolutely. 4% is a good number for dividend paying stocks.

Also inflation isn't over 15% hahaha.

[willbes]

Dividend paying stocks will be pulling from the value of the stock. The 4% you get will immediately drop the value of the stock by 4%ish.

Dividend paying stocks may not be a great option for most US people (and maybe others) unless they are in tax-advantaged accounts. You will be taxed on that as income and not capital gains, which would have occurred if you had a stock that held value and then sold it when you needed to.

[KMag]

In other words, ignoring taxes, in a long-term holding strategy, one would expect reinvesting dividends from a stock to perform as well as if that stock just didn't pay dividends (all else being equal, which it never is).

Though, taking into account taxes, the tax on dividends is effectively compounding annually while capital gains taxes are a simple rate. As long as the dividend tax rate for stocks held long-term is equal to the long-term capital gains tax rate, it's more tax-efficient for investors if a company buys back its own stock instead of paying dividends.

This is also the logic behind end-of-year loss harvesting: compounding interest on tax savings in capital gains losses.

I'm not an accountant or tax attorney.

[dzink]

Dividend paying stocks are from cash cow companies that attract investors not with growth but with a dividend. Many of them are heavily leveraged to take advantage of tax reduction from the payment of debt with their predictable cash. However, if they have a lot of debt, the current interest rate increases are possibly putting a dent in their calculations. Not sure a highly indebted company is a good place to store money in an increasing interest rate situation. Apple and microsoft offer dividends but they are not high.